Tuesday, December 3, 2019

Soybeans were the weak link in the grain complex again last week. South American weather has been OK, and forecasts call for periodic rains over the next two weeks. Trump announced there will likely not be any signing of a trade deal before the next US election in October 2020.

This could be because of President Trump’s support of the demonstrators in Hong Kong; especially after the recent landslide win by the pro-democracy side. This has obviously enraged the Chinese government.

This gave speculators the courage to sell a record number of soybean contracts in the latest week. They sold 62,000 contracts or 310 million bushels, putting them net short 43,000 contracts now. Their record short position is 169,000, however.

The record low real and large crop will help Brazil export a record 41 million metric tonnes of corn in 2019. Last year they exported only 22.8 mln mt. However, Rabobank predicts that exports in 2020 will fall to 30 mln mt, as they use more domestically for ethanol and livestock.

US corn is 89 percent harvested, the second slowest pace in the past 20 years. North Dakota is only at 36 percent. Michigan and Wisconsin are only at 66 percent. The slow pace is supporting basis, but not doing much for Chicago.

Ontario is also seriously behind, with little to no progress in the past two weeks due to weather. Most of the corn in fields is high in moisture, and not drying down, due to the wet conditions. Test weight is also an issue, and price discounts are widespread.

Trump has messed up grain markets with his trade policies. However, he hasn’t thrown their farmers completely under the bus. One-third of US farm income in 2019 will come from government sources and subsidized insurance payments.

The $22.4 billion in government aid in 2019 is up 64 percent from 2018, and the highest since 2005. This is helping farmers there cope with the low price, high-cost environment they are operating in.

Unfortunately, Canadian farmers are also caught in the same squeeze. Yet agriculture isn’t on the radar of any of our political parties, federally or provincially, especially in terms of any financial help. The playing field just keeps getting more uneven.